When it comes to mortgage loans in India, the loan against property (LAP) is a famous type of loan in India. Most of the people with properties prefer mortgaging their asset. It is majorly to arrange a large amount of money to fund many needs.
Talking of the terms of usage of the loan against property India facility, it is like that of personal loans. As a result, you are free to use
the money for many needs such as:
-Arranging money for an upcoming wedding
-To send your children for overseas education
-To expand a business
-To go on a world tour/vacation
-For covering medical emergencies
-For all other personal needs
The loan against property facility can help you borrow as high as up to Rs.3.5 crore as per the worth of your property and other eligibility terms. You can also get a tenor ranging between 2-20 years to repay the loan.
Although the LAP is not released for any specific purpose, the loan against property interest rate is significantly lower. It is because the lender is at a lower risk of losing its money as your property is pledged against it.
As a result, the loan against property is a ‘go-to loan’ if you need to borrow at a lower rate of interest. There are some confusions, misconceptions or myths around the LAP which needs to be cleared if you are also stuck. Read on and let this article clear some of the common LAP misconceptions!
The Loan Against Property Myths Debunked
1. One can only pledge residential properties
As the name suggests, anyone who wishes to apply for mortgage loan it must have understood that the loan is offered when you pledge the property. The misconception is that most of the applicants are that only residential properties can be mortgaged to get the loan. In reality, both the commercial and residential properties are eligible to serve as collateral to grab the loan. Even if those residential properties that you wish to pledge are self-occupied, they can still serve as the collateral for the LAP. The best part of the loan against property facility is that you will not lose property ownership. Yes, it is even after getting the big-ticket financial assistance.
2) The quantum of the loan depends on its purchase value
The loan amount that you can grab under the LAP facility depends on the property’s current value and not the price of the property. When you approach a bank or a non-banking finance company (NBFC) for LAP, the properties will be evaluated. As per the current price of your property, the final loan amount will then be decided. Also, the age of the property and its current condition will come into play. If you see that there is an appreciation in the property’s price, you will get a good loan amount. If it’s depreciated, the loan quantum will automatically go down. The latter is not true in most of the cases involving the loan against property.
3) The lender will take possession of your property
Here is another myth involving the LAP that you need to consider. You should be aware that the lender will not take the possession of your property. While the tenor is running and you are repaying the loan for all types of LAPs, there won’t be issues. The problem will crop up only when you fail to repay the loan within the tenor. In such a situation, the lender will then have the right to take the property’s possession. They will then attach the property to recover its loan amounts.
You are now aware of some major loan against property myths or misconceptions. Being aware would surely help you clear your mind, and you may apply for the loan without fearing anything else.
Bajaj Finserv presents pre-approved deals on loan against property, personal loans, business loans, EMI finance and beyond. You can apply for them and ease off all the loan procedures to get a hassle-free and faster approval.
- Arranging money for an upcoming wedding
- Debt consolidation
- To send your children for overseas education
- To expand a business
- To go on a world tour/vacation
- For covering medical emergencies
- For all other personal needs